Daily Archives: May 16, 2016

CFPB targets high-risk home lending groups

Housingwire:

According to the New York Times Dealbook, the Consumer Financial Protection Bureau recently began an informal inquiry into seller-financing arrangements, which are commonly referred to as contracts for deeds. These loans are for inexpensive homes to people with bad credit.

The bureau assigned two enforcement lawyers to research the seller-financing market and determine whether the terms of some deals violate federal truth-in-lending laws, say Matthew Goldstein and Alexandra Stevenson.

One such company, Battery Point, defends lending high interest loans to higher risk borrowers.
Company founder, Jeremy Healey, has sought to differentiate his firm from other big players in the market, saying that unlike them, Battery Point has structured its 20-year contracts to comply with new federal guidelines for high-interest mortgages.

“We support improving awareness of how non-mortgage financing products can create opportunities for consumers who are shut out of the mortgage market,” said Healey.

The Dealbook coverage adds that the New York State Department of Financial Services on Friday subpoenaed four investment firms that either are involved with seller-financed deals or provide financing for such deals, according to a person with direct knowledge of the matter who spoke on the condition of anonymity because the investigation is preliminary.

M&T Bank latest to settle FHA-lending violations, will pay $64 million

Another lender accused of violating False Claims Act

Joining a list that now includes Wells FargoFranklin American MortgageWalter Investment, First Tennessee Bank, Freedom Mortgage, among others, M&T Bank agreed to settle with the Department of Justice over alleged violations of the False Claims Act.

The Department of Justice announced Friday that M&T Bank will pay $64 million for originating loans that did not meet Federal Housing Administration underwriting standards.

M&T Bank becomes the latest lender to settle with the government, which has used the False Claims Act on several occasions to extract settlements out of mortgage companies.

The False Claims act is the primary law the government uses to prosecute vendors it feels fraudulently represented themselves while doing business with the nation.

Read on.